Author Archives: Sheri

Three Steps to Choosing a Guardian for Your Child with Special Needs

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Preparing a comprehensive estate plan to protect a child with special needs can be an emotional roller coaster. On the one hand, parents should be relieved that they are taking steps to guarantee that their child will be well cared for after they are gone. On the other hand, confronting one’s own mortality and having to decide who will manage the affairs of a child with special needs can be stressful.

Out of all of the decisions that parents of children with special needs have to confront, the choice of a guardian stands out as one of the most difficult because the person serving in that role will essentially step into the parents’ shoes and take care of the child. But parents don’t have to dread this decision, especially if they follow these steps:

1. Take Time to Choose, But Don’t Take Too Long

Choosing someone to become the guardian of your child is not a decision that should be made lightly, but this doesn’t mean that the decision should keep you up at night, either. Start by putting together a list of potential candidates. Don’t spend a lot of time worrying about the list; just write down anyone who could potentially serve. Then go through the list and eliminate anyone who, for whatever reason, doesn’t strike you as an optimal choice, keeping in mind that no one is going to be a perfect substitute for the original parent. Chances are, this ten-minute exercise will immediately winnow your options down to a couple of people. Once you’ve narrowed down your options, take some time to think about each person on the short list. But don’t get hung up on choosing a person yet; you will still have some work to do.

The key at this stage of the game is to not get overwhelmed with worry about your choices, especially since you haven’t even asked anyone on your list if they are willing to serve. One of the biggest mistakes parents of children with special needs make is getting so caught up in the decision making process that they don’t go ahead with their planning at all. Don’t let this be you — make your list, start to narrow it down, and then proceed to the next step. But whatever you do, don’t stop planning.

2. Talk to Your Potential Guardians and Make Sure to Encourage Honesty

After you’ve narrowed your list of potential guardians down to a few names, talk to each one (separately) and ask them if they are willing to serve. Don’t put these people on the spot with statements like, “If you don’t do it, I don’t know what we’ll do,” and encourage each person to be honest with you about his or her questions and concerns. Don’t look for immediate answers; give your potential guardians time to think about things and get back to you if they are on the fence.

This conversation may immediately narrow down your list, as some people may tell you that they absolutely will not or cannot serve. At the same time, talking face to face with your choices may help you to weed out a few more people.

3. Make a Decision and Put Your Plan into Action

After speaking with your prospective guardians you may be able to make a decision about who will serve. But if you still need to think about your choice, keep a few things in mind. First, you can always change your nomination at a later point, and, in fact, many people do. For instance, it may make sense for young parents to name their parents or older relatives as guardians while those people are still fairly young and then change their estate plans when the original nominee gets too old to serve. Likewise, as friends and family move away, parents may have to update their estate plans as the guardian they have picked for their child no longer lives in the area. Nothing is set in stone.

Here are some additional questions to consider if you are having a hard time choosing a guardian:
o Do I want my child to stay in his community and is the guardian willing to move here if she doesn’t already live here?
o Does the guardian have experience working with people with special needs?
o How does the guardian interact with my child specifically?
o Does the guardian have too much going on in his own life to care for a child, especially one with special needs?
o Does the guardian have children, how old are they and can the guardian take on another child?
o How old is the guardian? Do I have a backup in case he or she can’t serve?
o Does the guardian share my values about things like religion, education and finances?
Although the decision making process may not be easy for every family, it is a necessary one. Remember, the worst thing that you can do is to leave guardianship to chance, which is what will happen if you don’t have an estate plan that reflects your wishes. Once you’ve followed these simple steps and made your decision, put it into effect by meeting with your special needs planner and drafting the proper documents immediately. Again, don’t put it off.

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.

 

Accounting Is Not Only Important – It’s Mandatory

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Imagine how you would feel if you walked into your bank, asked for a summary of your account activity and the bank told you that it had no idea how much money was in your account or how it had been spent. Of course, this doesn’t normally happen because the bank has a fiduciary duty to account for your money and it takes that job very seriously. Unfortunately, too many trustees of special needs trusts or those who oversee funds for people with special needs don’t even know that they have a duty to account for the funds they manage, let alone perform that duty correctly.

All trustees, representative payees, guardians and conservators are required by law to keep track of funds under their control. In California all guardians and conservators are required to provide court accountings directly to the court for approval. Additional if a trust was established by the court in a conservatorship or guardianship, the trustee must account to the court.
Likewise, the Social Security Administration mandates yearly accounting by representative payees handling other people’s funds. In some cases, typically when a trust is not established by a court, the trustee has a duty to account that is spelled out in the document or by state law. But in all cases, the person with the fiduciary duty has to keep track of the money under her control, just like a bank.

Trust and guardianship accounting does not have to be difficult since, in quite a few cases, the trustee, conservator or guardian only has to worry about one or two bank accounts. This type of cash accounting is basically the same as keeping a balanced check book. The trustee, conservator or guardian simply records all transactions and makes sure that they match the monthly bank statement. Typically after the first year, the trustee, conservator or guardian itemizes all of the transactions and provides a report to the beneficiary and possibly the court explaining how the funds were spent and how much money remains. If court approval is not required, the trust beneficiary or his guardian typically has a certain period of time to object to the account before it becomes final.

The same principles apply to trustees accounting for larger pools of money, although in those cases the trustee usually has to account for investment gains and losses as well as typical expenditures. If the trust is large, it makes sense to hire an attorney or accountant to make sure that the accounts are properly prepared because they can get tricky if multiple investments are involved.

Although the accounting process is simple, it is surprising how few non-professional fiduciaries actually do it correctly (and even some professionals fall down on the job). Every year there are dozens of cases from across the country where trustees, conservators and guardians are removed from their positions because they can’t explain what happened to the funds under their control. In some cases, this is because the trustee, conservator or guardian actually looted the trust or guardianship/conservatorship account, but in many cases the person in the position of responsibility simply didn’t keep track of what was going on, either because he was too busy or he didn’t know that he needed to account for the funds under his control. When this happens, the trustee could possibly be sued or even go to jail.

Aside from the fact that a trustee or guardian has a duty to the person with special needs to account for his money, accounting also protects the trustee or guardian. Once an account becomes final due to court approval or the passage of time without objection by the beneficiary, no one can come back and sue the trustee for mishandling the funds that were accounted for, so long as the account was not fraudulent. If the trustee doesn’t file an account, she doesn’t get that important peace of mind.

If you’ve been named as the trustee of a special needs trust or as the representative payee, guardian or conservator of a person with special needs, you need to talk with your special needs planner immediately about accounting. It’s one of the most important duties you have.

 

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.

 

Seniors and Marriage

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There are a number of concerns for seniors who are considering remarrying. Pension, health insurance, social security benefits, and alimony are among the many financial concerns that need to be addresses when making the decision to marry. there are also the issues with inheritance and the characterization of the separate property of each spouse. The Deseret News published a really good article that covers many of the issues that need to be considered.

When financial concerns hinder even seniors from a trip down the aisle | Deseret News National.

In California, individuals over 62 years of age also have the option of registering as domestic partners with the Secretary of state, which afford them the same protections and benefits as marriage in the state of California. Registered domestic partnerships are not recognized under Federal law. To learn more about California registered domestic partnerships, see:

http://www.sos.ca.gov/dpregistry/

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.

Charitiy Fraud Alert

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The County of Santa Clara District Attorney’s office recently issued a fraud alert in relation to giving to charities after a disaster. The Federal Trade Commission also urges you to be on guard against scam artists who try to take advantage of someone else’s tragedy, as they see a rise in this type of fraud after natural disasters.

If you’re donating money to a charity, here’s how to make sure your dollars go to the causes you support.
• Donate to charities you know and trust. Find a charity with a track record of dealing with natural disasters. Be alert for charities that seem to have sprung up overnight in connection with current events. Check out the charity with the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar.
• Designate the disaster. Charities may give the option to designate your giving to a specific disaster. That way, you can ensure your funds are going to disaster relief, rather than a general fund.
• Ask if a caller is a paid fundraiser, who they work for, and what percentage of your donation goes to the charity and to the fundraiser. If you don’t get a clear answer — or if you don’t like the answer you get — consider donating to a different organization.
• Don’t give out personal or financial information — including your credit card or bank account number — unless you know the charity is reputable.
• Never send cash: you can’t be sure the organization will receive your donation, and you won’t have a record for tax purposes.
• Find out if the charity or fundraiser must be registered in your state by contacting the National Association of State Charity Officials.

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.

Health Law Requires Medicare To Cover Dementia Evaluation

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For those persons over 65, who are covered by Medicare, health law now requires Medicare to cover a screening for cognitive impairment during an annual wellness visit. Usually, this is done with a 30 question test called the mini-mental.  the test takes about ten minutes to complete. The experts can still not agree as to the value of the test being routinely administered to the general population. According to an article recently published by the Kasier Health News, ” The risk of dementia increases with age: its prevalence is 5 percent in people aged 71 to 79, rising to 37 percent of those older than 90. Mild cognitive impairment has many definitions, but the term generally refers to people whose impairment isn’t severe enough to hamper their ability to manage their daily lives. By some estimates up to 42 percent of people older than 65 have it. Mild cognitive impairment is a warning sign, but it may not progress to Alzheimer’s disease, says Dean Hartley, director of science initiatives at the Alzheimer’s Association. ”

To read the full article, go to:

Health Law Requires Medicare To Cover Dementia Evaluation – Kaiser Health News.

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.

Social Security Launches New Expedited Disability Process for Veterans

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Social Security announced the launch of a new disability process to expedite disability claims filed by veterans with a Department of Veterans Affairs (VA) disability compensation rating of 100% Permanent & Total (P&T). Under the new process, Social Security will treat these veterans’ applications as high priority and issue expedited decisions, similar to the way the agency currently handles disability claims from Wounded Warriors.

In order to receive the expedited service, veterans must tell Social Security they have a VA disability compensation rating of 100% P&T and show proof of their disability rating with their VA Notification Letter.

The VA rating only expedites Social Security disability claims processing and does not guarantee an approval for Social Security disability benefits.  These veterans must still meet the strict eligibility requirements for a disability allowance.
For information about this service, please visit www.socialsecurity.gov/pgm/disability-pt.htm.

For more about Social Security’s handling of Wounded Warrior’s disability claims, please visit www.socialsecurity.gov/woundedwarriors.

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.

What’s the Difference Between ‘Supplemental’ and ‘Special’ Needs Trusts?

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You may have heard the terms “special” needs trust and “supplemental” needs trust and wondered what the difference is. The short answer is that there’s no difference. Here’s the long answer.

When the field of special needs planning began some two decades ago, trusts created for people with disabilities were generally called supplemental needs trusts. The thinking was that the purpose of the trusts was to supplement the assistance provided by Medi-Cal (Medicaid), Medicare, Social Security, Supplemental Security Income (SSI) and other public benefits programs whose level of support is meager at best.

With passage of the OBRA legislation in 1993 authorizing the creation of self-settled trusts under 42 USC 1396p(d)(4)(A), some practitioners called for distinguishing between these new trusts and third-party trusts often created by a parent, by calling the former special needs trusts and continuing to call the latter trusts supplemental needs trusts. But this approach never really caught on.

Instead, over time both types of trusts have come under the rubric of special needs trusts and the term supplemental needs trust has fallen away. The term special needs trust refers to the purpose of the trust to pay for the beneficiary’s unique or special needs. In short, the title is focused more on the beneficiary while the name supplemental needs trust addresses the shortfalls of our public benefits programs.

Special needs trusts now encompass both traditional third-party trusts and those under OBRA, which are often known as (d)(4)(A) trusts referring to the statute or as pay-back trusts referring to the feature that any funds remaining in the trust at the beneficiary’s death must be used to reimburse Medi-Cal (or the state Medicaid agency in states other than California), or as self-settled trusts referring to the fact that these trusts are created with the Medicaid beneficiary’s own funds.

Special needs trusts created with someone else’s funds, whether a parent, grandparent, or someone else, are often referred to as third-party special needs trusts.

In short, the reference to the trusts as supplemental needs trusts rather than special needs trusts is something of a survival. But whats in a name? Whether supplemental or special the trusts serve the same purpose of helping meet the needs of individuals with disabilities while still permitting them to qualify for vital public benefits programs.

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.

Stetsen National Special Needs Conference

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I spent the last several days in Florida at the Stetson National Special Needs Conference and wanted to share some of the information that I found helpful at the conference.

ACA and ABLE

I attended sessions with experts who opined on the effects on the Special Needs Community of the Affordable Care Act and the proposed ABLE legislation. There is a lot of confusion and disagreement on the impact of this legislation.

One immediate concern is with the on-line application process for the medical exchanges. One of the questions that must be answered to apply is whether or not the applicant is receiving Medi-Cal (Medicaid). If the applicant answers affirmatively, the session ends and the applicant cannot get a quote for the other possible insurances. This takes away the choice of paying for private insurance for a person with a disability without first giving up their benefits under Medi-Cal.

VETERANS AND SNTs

Currently, only one of the twelve death benefits available to veterans allow a special needs trust to be the beneficiary. Service members life insurance may name a special needs trust as the beneficiary. There is currently legislation in the house to allow additional benefits to designate a special needs trust as the beneficiary.

SPECIAL EDUCATION ADVOCACY

While this is not an area in which I practice, I attended a seminar to get an overview of the issues in education and the rights of the student and parents. We appear to be quite lucky in California with education for special needs, though still not perfect.

TRUSTEE LIABILITY

I went to a number of presentations that discussed the liability of trustees of special needs trusts. I have a list of suggestions for the trustees that we represent to help minimize their liability and maximize the benefits to the beneficiaries, which I will put into a future blog.

IRAs, RMDs, and TAXATION of SNTs

I particularly enjoyed the two presentations that I attended on designating SNTs as beneficiaries of IRAs and the effect to the RMDs (required minimum distributions). I learned not only the rules, but some creative ways to use them to maximize the benefit to the trust and ultimately the beneficiary.

* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.